by Naomi Klein
The demonstrations were not against economic reform per se; they were against the specific Friedmanite nature of the reforms—their speed, ruthlessness and the fact that the process was highly antidemocratic. Wang says that the protesters’ call for elections and free speech were intimately connected to this economic dissent. What drove the demand for democracy was the fact that the party was pushing through changes that were revolutionary in scope, entirely without popular consent. There was, he writes, “a general request for democratic means to supervise the fairness of the reform process and the reorganization of social benefits.”47
These demands forced the Politburo to make a definite choice. The choice was not, as was so often claimed, between democracy and Communism, or “reform” versus the “old guard.” It was a more complex calculation: Should the party bulldoze ahead with its free-market agenda, which it could do only by rolling over the bodies of the protesters? Or should it bow to the protesters’ demands for democracy, cede its monopoly on power and risk a major setback to the economic project?
Some of the free-market reformers within the party, most notably General Secretary Zhao Ziyang, appeared willing to gamble on democracy, convinced that economic and political reform could still be compatible. More powerful elements in the party were not willing to take the risk. The verdict came down: the state would protect its economic “reform” program by crushing the demonstrators.
That was the clear message when, on May 20, 1989, the government of the People’s Republic of China declared martial law. On June 3, the tanks of the People’s Liberation Army rolled into the protests, shooting indiscriminately into the crowds. Soldiers stormed onto buses where student demonstrators were taking cover and beat them with sticks; more troops broke through the barricades protecting Tiananmen Square, where students had erected a Goddess of Democracy statue, and rounded up the organizers. Similar crackdowns took place simultaneously across the country.
There will never be reliable estimates for how many people were killed and injured in those days. The party admits to hundreds, and eyewitness reports at the time put the number of dead at between two thousand and seven thousand and the number of injured as high as thirty thousand. The protests were followed by a national witch hunt against all regime critics and opponents. Some forty thousand were arrested, thousands were jailed and many—possibly hundreds—were executed. As in Latin America, the government reserved its harshest repression for the factory workers, who represented the most direct threat to deregulated capitalism. “Most of those arrested, and virtually all who were executed, were workers. With the obvious aim of terrorizing the population, it became a well-publicized policy to systematically subject arrested individuals to beatings and torture,” writes Maurice Meisner.48
For the most part, the massacre was covered in the Western press as another example of Communist brutality: just as Mao had wiped out his opponents during the Cultural Revolution, now Deng, “the Butcher of Beijing,” crushed his critics under the watchful eye of Mao’s giant portrait. A Wall Street Journal headline claimed that “China’s Harsh Actions Threaten to Set Back [the] 10-Year Reform Drive”—as if Deng was an enemy of those reforms and not their most committed defender, determined to take them into bold new territory.49
Five days after the bloody crackdown, Deng addressed the nation and made it perfectly clear that it wasn’t Communism he was protecting with his crackdown, but capitalism. After dismissing the protesters as “a large quantity of the dregs of society,” China’s president reaffirmed the party’s commitment to economic shock therapy. “In a word, this was a test, and we passed,” Deng said, adding, “Perhaps this bad thing will enable us to go ahead with reform and the open-door policy at a more steady, better, even a faster pace…. We haven’t been wrong. There’s nothing wrong with the four cardinal principles [of economic reform]. If there is anything amiss, it’s that these principles haven’t been thoroughly implemented.”*50
Orville Schell, a China scholar and journalist, summarized Deng Xiaoping’s choice: “After the massacre of 1989, he in effect said we will not stop economic reform; we will in effect halt political reform.”51
For Deng and the rest of the Politburo, the free-market possibilities were now limitless. Just as Pinochet’s terror had cleared the streets for revolutionary change, so Tiananmen paved the way for a radical transformation free from fear of rebellion. If life grew harder for peasants and workers, they would either have to accept it quietly or face the wrath of the army and the secret police. And so, with the public in a state of raw terror, Deng rammed through his most sweeping reforms yet.
Before Tiananmen, he had been forced to ease off some of the more painful measures; three months after the massacre, he brought them back, and he implemented several of Friedman’s other recommendations, including price deregulation. For Wang Hui, there is an obvious reason why “market reforms that had failed to be implemented in the late 1980s just happened to have been completed in the post-1989 environment”; the reason, he writes, “is that the violence of 1989 served to check the social upheaval brought about by this process, and the new pricing system finally took shape.”52 The shock of the massacre, in other words, made shock therapy possible.
In the three years immediately following the bloodbath, China was cracked open to foreign investment, with special export zones constructed throughout the country. As he announced these new initiatives, Deng reminded the country that “if necessary, every possible means will be adopted to eliminate any turmoil in the future as soon as it has appeared. Martial law, or even more severe methods, may be introduced.”*53
It was this wave of reforms that turned China into the sweatshop of the world, the preferred location for contract factories for virtually every multinational on the planet. No country offered more lucrative conditions than China: low taxes and tariffs, corruptible officials and, most of all, a plentiful low-wage workforce that, for many years, would be unwilling to risk demanding decent salaries or the most basic workplace protections for fear of the most violent reprisals.
For foreign investors and the party, it has been a win-win arrangement. According to a 2006 study, 90 percent of China’s billionaires (calculated in Chinese yuan) are the children of Communist Party officials. Roughly twenty-nine hundred of these party scions—known as “the princelings”—control $260 billion.54 It is a mirror of the corporatist state first pioneered in Chile under Pinochet: a revolving door between corporate and political elites who combine their power to eliminate workers as an organized political force. Today, this collaborative arrangement can be seen in the way that foreign multinational media and technology companies help the Chinese state to spy on its citizens, and to make sure that when students do Web searches on phrases like “Tiananmen Square Massacre,” or even “democracy,” no documents turn up. “The creation of today’s market society was not the result of a sequence of spontaneous events,” writes Wang Hui, “but rather of state interference and violence.”55
One of the truths revealed by Tiananmen was the stark similarity between the tactics of authoritarian Communism and Chicago School capitalism—a shared willingness to disappear opponents, to blank the slate of all resistance and begin anew.
Despite the fact that the massacre happened just months after he had encouraged Chinese officials to push forward with painful and unpopular free-market policies, Friedman never did face “an avalanche of protests for having been willing to give advice to so evil a government.” And as usual, he saw no connection between the advice he had given and the violence required to enforce it. While condemning China’s use of repression, Friedman continued to hold it up as an example of “the efficacy of free-market arrangements in promoting both prosperity and freedom.”56
In a strange coincidence, the Tiananmen Square massacre took place on the same day as Solidarity’s historic election sweep in Poland—June 4, 1989. They were, in a way, two very different studies in the shock doctrine. Both countries had needed to exploit shock an
d fear to push through a free-market transformation. In China, where the state used the gloves-off methods of terror, torture and assassination, the result was, from a market perspective, an unqualified success. In Poland, where only the shock of economic crisis and rapid change were harnessed—and there was no overt violence—the effects of the shock eventually wore off, and the results were far more ambiguous.
In Poland, shock therapy may have been imposed after elections, but it made a mockery of the democratic process since it directly conflicted with the wishes of the overwhelming majority of voters who had cast their ballots for Solidarity. As late as 1992, 60 percent of Poles still opposed privatization for heavy industry. Defending his unpopular actions, Sachs claimed he had no choice, likening his role to that of a surgeon in an emergency room. “When a guy comes into the emergency room and his heart’s stopped, you just rip open the sternum and you don’t worry about the scars that you leave,” he said. “The idea is to get the guy’s heart beating again. And you make a bloody mess. But you don’t have any choice.”57
But once Poles recovered from the initial surgery, they had questions about both the doctor and the treatment. Shock therapy in Poland did not cause “momentary dislocations,” as Sachs had predicted. It caused a full-blown depression: a 30 percent reduction in industrial production in the two years after the first round of reforms. With government cutbacks and cheap imports flooding in, unemployment skyrocketed, and in 1993 it reached 25 percent in some areas—a wrenching change in a country that, under Communism, for all its many abuses and hardships, had no open joblessness. Even when the economy began growing again, high unemployment remained chronic. According to the World Bank’s most recent figures, Poland has an unemployment rate of 20 percent—the highest in the European Union. For those under twenty-four, the situation is far worse: 40 percent of young workers were unemployed in 2006, twice the EU average. Most dramatic are the number of people in poverty: in 1989, 15 percent of Poland’s population was living below the poverty line; in 2003, 59 percent of Poles had fallen below the line.58 Shock therapy, which eroded job protection and made daily life far more expensive, was not the route to Poland’s becoming one of Europe’s “normal” countries (with their strong labor laws and generous social benefits) but to the same gaping disparities that have accompanied the counterrevolution everywhere it has triumphed, from Chile to China.
The fact that it was Solidarity, the party built by Poland’s blue-collar workers, that oversaw the creation of this permanent underclass represented a bitter betrayal, one that bred a deep cynicism and anger in the country that has never fully lifted. Solidarity’s leaders often play down the party’s socialist roots, with Walesa now claiming that as far back as 1980 he knew they would “have to build capitalism.” Karol Modzelewski, a Solidarity militant and intellectual who spent eight and a half years in Communist jails, retorts angrily, “I wouldn’t have spent a week nor a month, let alone eight and a half years in jail for capitalism!”59
For the first year and a half of Solidarity rule, workers believed their heroes when they were assured that the pain was temporary, a necessary stop on the way to bringing Poland into modern Europe. Even in the face of soaring unemployment, they staged only a smattering of strikes and waited patiently for the therapeutic part of their shock therapy to take effect. When the promised recovery didn’t arrive, at least not in the form of jobs, Solidarity’s members were simply confused: How could their own movement have delivered a standard of living worse than that under Communism? “[Solidarity] defended me in 1980 when I set up a union committee,” one forty-one-year-old construction worker said. “But when I went to them for help this time, they told me that I have to suffer for the sake of reform.”60
About eighteen months into Poland’s period of “extraordinary politics,” Solidarity’s base had had enough and demanded an end to the experiment. The extreme dissatisfaction was reflected in a marked increase in the number of strikes: in 1990, when workers were still giving Solidarity a free pass, there were only 250 strikes; by 1992 there were more than 6,000 such protests.61 Faced with this pressure from below, the government was forced to slow down its more ambitious privatization plans. By the end of 1993—a year that saw almost 7,500 strikes—62 percent of Poland’s total industry was still public.62
The fact that Polish workers managed to stop the wholesale privatization of their country means that as painful as the reforms were, they could have been far worse. The wave of strikes unquestionably saved hundreds of thousands of jobs that would otherwise have been lost if these supposedly inefficient firms had been allowed to close or be radically downsized and sold off. Interestingly, Poland’s economy began growing quickly in this same period, proving, according to the prominent Polish economist and former Solidarity member Tadeusz Kowalik, that those who were ready to write off the state firms as inefficient and archaic were “obviously wrong.”
Besides going on strike, Polish workers found another way to express their anger with their onetime allies in Solidarity: they used the democracy they had fought for to punish the party decisively at the polls, including their once-beloved leader Lech Walesa. The most dramatic trouncing came on September 19, 1993, when a coalition of left parties, including the former ruling Communists (rebranded Democratic Left Alliance), won 66 percent of the seats in parliament. Solidarity had, by this time, splintered into warring factions. The trade union faction won less than 5 percent, losing official party status in the parliament, and a new party led by Mazowiecki, the prime minister, won just 10.6 percent—a resounding rejection of shock therapy.
Yet somehow, in the years to come, as dozens of countries struggled with how to reform their economies, the inconvenient details—the strikes, the election defeats, the policy reversals—would be lost. Instead, Poland would be held up as a model, proof that radical free-market makeovers can take place democratically and peacefully.
Like so many stories about countries in transition, this one was mostly a myth. But it was better than the truth: in Poland, democracy was used as a weapon against “free markets” on the streets and at the polls. Meanwhile in China, where the drive for free-wheeling capitalism rolled over democracy in Tiananmen Square, shock and terror unleashed one of the most lucrative and sustained investor booms in modern history. Another miracle born of a massacre.
CHAPTER 10
DEMOCRACY BORN IN CHAINS
SOUTH AFRICA’S CONSTRICTED FREEDOM
Reconciliation means that those who have been on the underside of history must see that there is a qualitative difference between repression and freedom. And for them, freedom translates into having a supply of clean water, having electricity on tap; being able to live in a decent home and have a good job; to be able to send your children to school and to have accessible health care. I mean, what’s the point of having made this transition if the quality of life of these people is not enhanced and improved? If not, the vote is useless.
—Archbishop Desmond Tutu, chair of South Africa’s Truth and Reconciliation Commission, 20011
Before transferring power, the Nationalist Party wants to emasculate it. It is trying to negotiate a kind of swap where it will give up the right to run the country its way in exchange for the right to stop blacks from running it their own way.
—Allister Sparks, South African journalist2
In January 1990, Nelson Mandela, age seventy-one, sat down in his prison compound to write a note to his supporters outside. It was meant to settle a debate over whether twenty-seven years behind bars, most of it spent on Robben Island off the coast of Cape Town, had weakened the leader’s commitment to the economic transformation of South Africa’s apartheid state. The note was only two sentences long, and it decisively put the matter to rest: “The nationalisation of the mines, banks and monopoly industries is the policy of the ANC, and the change or modification of our views in this regard is inconceivable. Black economic empowerment is a goal we fully support and encourage, but in our situation state control
of certain sectors of the economy is unavoidable.”3
History, it turned out, was not over just yet, as Fukuyama had claimed. In South Africa, the largest economy on the African continent, it seemed that some people still believed that freedom included the right to reclaim and redistribute their oppressors’ ill-gotten gains.
That belief had formed the basis of the policy of the African National Congress for thirty-five years, ever since it was spelled out in its statement of core principles, the Freedom Charter. The story of the charter’s drafting is the stuff of folklore in South Africa, and for good reason. The process began in 1955, when the party dispatched fifty thousand volunteers into the townships and countryside. The task of the volunteers was to collect “freedom demands” from the people—their vision of a postapartheid world in which all South Africans had equal rights. The demands were handwritten on scraps of paper: “Land to be given to all landless people,” “Living wages and shorter hours of work,” “Free and compulsory education, irrespective of color, race or nationality,” “The right to reside and move about freely” and many more.4 When the demands came back, leaders of the African National Congress synthesized them into a final document, which was officially adopted on June 26, 1955, at the Congress of the People, held in Kliptown, a “buffer zone” township built to protect the white residents of Johannesburg from the teeming masses of Soweto. Roughly three thousand delegates—black, Indian, “colored” and a few white—sat together in an empty field to vote on the contents of the document. According to Nelson Mandela’s account of the historic Kliptown gathering, “the charter was read aloud, section by section, to the people in English, Sesotho and Xhosa. After each section, the crowd shouted its approval with cries of ‘Afrika!’ and ‘Mayibuye!’”5 The first defiant demand of the Freedom Charter reads, “The People Shall Govern!”
